Wednesday, 4 March 2015

FRACKING

I don’t know what I think about Fracking. As a generally
Green person, I am against it. It is the most expensive method of extracting
oil from the ground, $115 a barrel compared to $10 per barrel from Iran and Saudi. It is hugely wasteful of
water, itself a valuable resource.

But on the other hand, UK Fracking would mean less dependency
on these Middle Eastern extractors and that has to be a good thing; we can’t criticise
their awful human-rights records because we need their carbon. But things seem
to be changing and the balance shifting. A week or so ago Obama finally vetoed
the Trans-Alaska oil pipeline and then last week, Shell shelved their plans to
develop a second tar sands mine in Alberta, Canada because of the costs involved.

All tar sands expoitation is incompatible of course with a
2C limit on future Global Warming. As is exploiting the Arctic for oil. In fact
I have been reading a recent study that shows that if the world is serious
about the 2C limit then we should leave the carbon in the ground. The fossil
fuel reserves are three times as much as could ever be burned.

So which carbon should be left in the ground, unexploited?
Cheap Iraqi oil? The political and social consequences of that are
mind-boggling. Expensive Ukrainian coal? Cheap Chinese coal? Cheap Iranian gas?
Expensive American Shale? Who decides? Well, arguably the market. The reason
Shell has abandoned its plans for another tar mine in Alberta are entirely
market-driven; they can’t make a profit from it in the present glut. Doesn’t
matter about the Canadian economy or workers jobs to a giant like Shell. It
seems reasonable to assume therefore that if Ukraine, for example, loses
business opportunities because their international energy costs [home-grown
coal] are too high, they will shut the mines. Thousands of jobs would be at
risk.

Not the least interesting aspect of all this is the effect
2C will have upon company profits. If Exxon, Shell and BP aren’t extracting
carbon, what will happen to their business model? What will happen to their profits?
Will there be any profits? Will they bulldoze their way into the Arctic
regardless, even if it means a world surplus?